12.07.2015 Views

Stockland Direct Office Trust No.1

Stockland Direct Office Trust No.1

Stockland Direct Office Trust No.1

SHOW MORE
SHOW LESS
  • No tags were found...

Do you know the secret to free website traffic?

Use this trick to increase the number of new potential customers.

Stockland Direct Office Trust No.1Directors’ Report (continued)For the Year Ended 30 June 2009Stockland Capital PartnersLimited Audit and Risk CommitteeThe Audit and Risk Committee assists theBoard in fulfilling its governance and disclosureresponsibilities in relation to financial reporting,internal controls, risk management systemsand internal and external audits.The primary objective of the Committee is toassist the Board of SCPL in discharging itsresponsibilities for:• financial reporting and audit practices;• accounting policies;• the management of risk; and• the adequacy and effectiveness ofinternal controls.The Committee meets at least quarterly and itsmeetings are attended by management andinternal and external audit and other parties asrelevant. The Committee may meet privatelywith the external auditors in the absence ofmanagement at least once a year. TheCommittee has the power to conduct orauthorise investigations into, or consultindependent specialists on, any matters withinthe Committee’s scope of responsibility. TheCommittee has a written terms of referencewhich incorporates best practice. Its membersmust be independent of management and atleast one member of the Committee hasrelevant accounting qualifications andexperience and all members have a goodunderstanding of financial reporting.The members of the Committee during orsince the end of the financial year were:Mr T Williamson (Chair) – Non-ExecutiveDirector of StocklandMr A Sherlock – Non-Executive DirectorPrincipal activityThe principal activity of the Trust is theownership of property in Waterfront Placesituated at 1 Eagle Street, Brisbane, via its50% investment in SDOT Sub-Trust 1.Review and results of operationsThe Trust recorded a loss from operatingactivities of $43,043,000 for the financial yearended 30 June 2009 (2008: profit of$43,271,000).A downwards revaluation of the WaterfrontPlace property totalling $49,250,000 wasrecognised in the Trust’s Income Statementthrough the recognition of the Trust’s share ofnet loss in SDOT Sub-Trust 1. During thefinancial year, an independent valuation wasperformed resulting in the Waterfront Placeproperty being revalued downwards to$471,500,000 (100% basis). This representsa decrease of 17% on the 30 June 2008carrying value of $570,000,000 (100% basis).For the financial year ended 30 June 2009,a fair value decrement of $5,559,000 (2008:increment of $1,002,000) in the valuation of theinterest rate swap was recorded in Reservesas set out in Note 15 of the FinancialStatements. As at 30 June 2009, the fair valueof the interest rate swap was $2,302,000liability (2008: $3,257,000 asset) as set out inNote 8 and 13 of the Financial Statements.Distributions paid or declared by the Trust toUnitholders during the financial year are setout in Note 17 of the Financial Statements.Proposed extension of theTrust’s lifeAs disclosed in the Trust’s Product DisclosureStatement (“PDS”) dated 10 September 2004,it was expected that the term of the Trust beat least six years. Also outlined is therequirement for the Responsible Entity,on or before 31 December 2009, to make arecommendation to Unitholders concerningthe future strategy of the Trust at a meeting ofUnitholders convened by the ResponsibleEntity. Investors will vote by Special Resolution(75% by value of the units voted on theresolution) on the recommended futurestrategy of the Trust.Given the impending expiry of the original termof the Trust, a comprehensive review is beingundertaken by the Responsible Entity.Discussions with independent advisers haveconfirmed that current market conditions makethe execution of a sale of a 50% share in alarge premium grade asset such as theWaterfront Place property, extremely difficult.The Responsible Entity is likely to recommendto Unitholders that the duration of the Trust isextended for a further four years with amandate to sell the Trust’s 50% interest inSDOT Sub-Trust 1 within that period. TheResponsible Entity considers that this is in theUnitholders’ best interests, to allow for anorderly sale that would maximise Unitholders’value. A meeting of Unitholders is planned forlate November 2009, with explanatorydocumentation being issued to Unitholdersin late October 2009.Update of debt renewalAs at 30 June 2009, the Trust has a$108,434,000 (2008: $108,434,000) loan andcapital expenditure facility agreement withWestpac Banking Corporation (“Westpac”) ofwhich $100,235,000 had been drawn (2008:$99,735,000). The facilities are due to matureon 1 July 2010. Further information in relationto the loan facilities can be found in Note 11 tothe Financial Report.Due to the maturity date being within12 months of the date of this report, there isuncertainty surrounding the Trust’s ability torenew or repay the facilities should Westpaccall upon the debt upon the scheduledmaturity date. Despite this uncertainty, theDirectors believe reasonable grounds exist toexpect the facilities will be renewed orrefinanced. At the date of this report, being20 August 2009, the Directors have formedthe view that the Trust’s Financial Report forthe year ended 30 June 2009 can be preparedon a going concern basis. Further informationin relation to this can be found in Note 1(b) ofthe Financial Report.Significant changes in the stateof affairsThere have been no significant changes in thestate of the affairs of the Trust during thefinancial year.Events subsequent to the endof the yearAs at 1 July 2009, the $108,434,000 totalloan facility with Westpac matures within12 months, being 1 July 2010 and hence is acurrent liability subsequent to the end of thefinancial year. As at 1 July 2009, $100,235,000has been drawn down. Negotiations havecommenced and are ongoing with the Trust’sfinanciers in relation to renegotiation andextension of the loan facility. The Directorsconsider it is likely that a successfulrenegotiation will be achieved. The Directorsbelieve that while this is a material uncertainty,it does not cast doubt on the Trust’s ability tocontinue as a going concern.Apart from the above, there has not arisen,in the interval between the end of the currentfinancial year and the date of this report, anyother item, transaction or event of a materialor unusual nature, likely, in the opinion of theDirectors, to affect significantly the operationsof the Trust, the results of operations, or thestate of the affairs of the Trust, in futurefinancial years.2Stockland Direct Office Trust No.1 June 2009


Stockland Direct Office Trust No.1Directors’ Report (continued)For the Year Ended 30 June 2009Likely developmentsThe Trust will continue to review investmentmanagement strategies with a view tooptimising both the income and capital returnover the investment term.Given the impending expiry of the original termof the Trust, a comprehensive review is beingundertaken by the Responsible Entity. On orbefore 31 December 2009, the ResponsibleEntity will make a recommendation toUnitholders concerning the future strategy ofthe Trust at a meeting of Unitholders convenedby the Responsible Entity. Investors will voteby Special Resolution on the recommendedfuture strategy of the Trust at the meeting.Environmental regulationThe Trust’s operations are subject to variousenvironmental regulations under bothCommonwealth and State legislation.The Responsible Entity believes that theTrust has adequate systems in place forthe management of its environmentalresponsibilities and is not aware of any breachof environmental requirements as they mayapply to the Trust.Related partiesStockland Trust Management Limited, as theResponsible Entity of Stockland Trust, arelated party of the Responsible Entity, holds4,621,500 units in the Trust as at 30 June2009 (2008: 2,537,500).Interests of the ResponsibleEntityThe Responsible Entity has not held any unitsin the Trust either directly or indirectly duringthe financial year.Responsible Entity’s remunerationThe Responsible Entity charged a responsibleentity fee of 0.45% p.a. of the gross assets ofthe Trust. The Responsible Entity may defer aportion of the annual fees each year. TheResponsible Entity is entitled to recover all feesdeferred either from Trust earnings or onwinding up of the Trust. The ResponsibleEntity charges are set out in Note 20 of theFinancial Report.Directors’ interestsThe relevant interest of each Director of theResponsible Entity holding units in the Trust atthe date of this report is as follows:DirectorNumber of unitsheldMr David Kent 20,000Mr Matthew Quinn 15,000Indemnities and insurance ofofficers and auditorsIndemnificationUnder the Trust Constitution, the ResponsibleEntity, including its officers and employees, isindemnified out of the Trust’s assets for anyloss, damage, expense or other liabilityincurred by it in properly performing orexercising any of its powers, duties or rightsin relation to the Trust.The Trust has not indemnified or made arelevant agreement for indemnifying against aliability in respect of any person who is theauditor of the Trust.Insurance premiumsThe Responsible Entity has paid insurancepremiums in respect of Directors’ and officers’liability insurance contracts for the Directors.Such insurance contracts insure againstcertain liabilities (subject to specifiedexclusions) for persons who are or have beenDirectors and officers of the Responsible Entity.In addition, the Responsible Entity has paidinsurance premiums for professional indemnityinsurance policies to cover certain risks forthe Directors.Details of the nature and the amount of theliabilities covered or the amount of thepremium paid has not been included as suchdisclosure is prohibited under the terms of theinsurance contracts.Lead Auditor’s IndependenceDeclaration under Section 307Cof the Corporations Act 2001The external auditor’s independencedeclaration is set out on page 4 and formspart of the Directors’ Report for the yearended 30 June 2009.RoundingThe Trust is an entity of the kind referred to inASIC Class Order 98/100 (as amended) and inaccordance with that Class Order, amounts inthe Financial Report and Directors’ Reporthave been rounded to the nearest thousanddollars, unless otherwise stated.Signed in accordance with a resolution of theDirectors:Matthew QuinnDirectorDated at Sydney, 20 August 2009Stockland Direct Office Trust No.1 June 2009 3


Stockland Direct Office Trust No.1Lead Auditor’s Independence Declarationunder Section 307C of the Corporations Act 2001To: the directors of Stockland Capital Partners Limited, the Responsible Entity of Stockland Direct Office Trust No. 1.I declare that, to the best of my knowledge and belief, in relation to the audit for the year ended 30 June 2009 there have been:(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and(ii) no contraventions of any applicable code of professional conduct in relation to the audit.KPMGScott FlemingPartnerSydney20 August 2009KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative.4Stockland Direct Office Trust No.1 June 2009


Stockland Direct Office Trust No.1Income StatementFor the Year Ended 30 June 20092009 2008Notes $’000 $’000Revenue and other incomeInterest income 90 135Total revenue and other income 90 135Share of net (loss)/profit of investments accounted for using the equity method 7 (35,495) 52,875Finance costs to external parties 1,2 (6,693) (6,680)Auditors’ remuneration 4 (51) (47)Responsible Entity fees 20 (1,248) (1,231)Performance fee write back/(expense) 12 1,009 (1,193)Unwind of discount on performance fee provision 1 12 (450) (372)Other expenses (205) (216)(Loss)/profit from operating activities (43,043) 43,271Distribution/finance expense to Unitholders 1 17 (5,820) (5,653)Change in net assets attributable to Unitholders 16 (48,863) 37,6181Total finance costs for the Trust are $12,963,000 (2008: $12,705,000), being the sum of finance costs to external parties, unwind of discount on performance fee provision and distributions to Unitholders. In order to comply with AASB 132“Financial Instruments: Presentation” (“AASB 132”), the Unitholders’ funds are required to be treated as a liability to Unitholders and trust distributions to be treated as an expense in the Income Statement.2Relates to interest expense of the Trust’s interest-bearing financial liabilities which is carried at amortised cost.The above Income Statement should be read in conjunction with the accompanying notes.Stockland Direct Office Trust No.1 June 2009 5


Stockland Direct Office Trust No.1Balance SheetAs at 30 June 20092009 2008Notes $’000 $’000Current assetsCash and cash equivalents 5 2,342 2,157Other assets 6 138 176Total current assets 2,480 2,333Non-current assetsInvestments accounted for using the equity method 7 233,825 283,732Other assets 8 – 3,257Total non-current assets 233,825 286,989Total assets 236,305 289,322Current liabilitiesTrade and other payables 9 2,172 3,331Other liabilities 10 214 –Total current liabilities 2,386 3,331Non-current liabilitiesInterest-bearing loans and borrowings 11 100,110 99,503Provisions 12 6,238 6,797Other liabilities 13 2,302 –Total non-current liabilities 108,650 106,300Total liabilities (excluding net assets attributable to Unitholders) 111,036 109,631Net assets attributable to Unitholders 16 125,269 179,691The above Balance Sheet should be read in conjunction with the accompanying notes.6Stockland Direct Office Trust No.1 June 2009


Stockland Direct Office Trust No.1Statement of Changes in EquityFor the Year Ended 30 June 2009Unitholders’ FundsUnits on issue Undistributed income Total2009 2008 2009 2008 2009 2008$’000 $’000 $’000 $’000 $’000 $’000Opening balance – – – – – –Effective portion of changes in fair value of cash flow hedges – – – – – –Total income and expenses recognised directly in equity for the financial year – – – – – –Profit for the financial year – – – – – –Total recognised income and expenses for the financial year – – – – – –Closing balance – – – – – –The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.Stockland Direct Office Trust No.1 June 2009 7


Stockland Direct Office Trust No.1Cash Flow StatementFor the Year Ended 30 June 20092009 2008Notes $’000 $’000Cash flows from operating activitiesCash receipts in the course of operations 129 107Cash payments in the course of operations (2,270) (1,381)Distributions received from joint venture entity 7 14,981 15,246Interest received 90 135Interest paid (6,693) (6,707)Net cash inflow from operating activities 18 6,237 7,400Cash flows from investing activitiesPayments for unlisted units in joint venture entity 7 (569) (6,485)Net cash utilised in investing activities (569) (6,485)Cash flows from financing activitiesProceeds from external party financing 500 6,447Distributions paid (5,983) (5,380)Net cash (utilised in)/inflow from financing activities (5,483) 1,067Net increase in cash and cash equivalents 185 1,982Cash and cash equivalents at the beginning of the financial year 2,157 175Cash and cash equivalents at the end of the financial year 5 2,342 2,157The above Cash Flow Statement should be read in conjunction with the accompanying notes.8Stockland Direct Office Trust No.1 June 2009


Stockland Direct Office Trust No.1Notes to the Financial StatementsFor the Year Ended 30 June 20091 Summary of significantaccounting policiesStockland Direct Office Trust No. 1 (“theTrust”) is a Managed Investment Schemedomiciled in Australia.The Financial Report of the Trust as at and forthe financial year ended 30 June 2009 wasauthorised for issue by the Directors of theResponsible Entity on 20 August 2009.(a) Statement of complianceThe Financial Report is a general purposefinancial report which has been prepared inaccordance with Australian AccountingStandards (“AASBs”) (including AustralianInterpretations) adopted by the AustralianAccounting Standards Board (“AASB”) and theCorporations Act 2001. The Financial Reportcomplies with the International FinancialReporting Standards (“IFRSs”) andinterpretations adopted by the InternationalAccounting Standards Board (“IASB”).(b) Basis of preparationThe Financial Report is presented in Australiandollars, which is the Trust’s functionalcurrency.The Trust is an entity of the kind referred to inASIC Class Order 98/100 (as amended) and inaccordance with that Class Order, amounts inthe Financial Report have been rounded to thenearest thousand dollars, unless otherwisestated.The Financial Report has been prepared onthe basis of the going concern and historicalcost conventions except for derivative financialinstruments and investment property held bythe joint venture entity, which are stated attheir fair value.While the management of the ResponsibleEntity remains in discussions with Westpac onthe loan facility extension, the Directors are notaware of any circumstances that may lead tothe Trust not obtaining an extension to theexisting loan facility prior to the expiry on1 July 2010. On the date of this report, being20 August 2009, based on information knownat this date, the Directors have formed theview that the Financial Report for the yearended 30 June 2009, can be prepared on agoing concern basis as they believereasonable grounds exist to expect the loanfacilities will be renewed or refinanced. TheDirectors consider it is likely that a successfulrenegotiation will be achieved. The Directorsacknowledge that while this is a materialuncertainty, it does not cast doubt on theTrust’s ability to continue as a going concern.This view was formed by taking into account anumber of factors including the financialposition of the Trust as at 30 June 2009 andinformation known at the date of this report,and includes the following:• As at 30 June 2009, the Trust’s total assetsequal $236,305,000. This value is 2.4 timesthe amount of drawn debt of $100,235,000;and• The Trust can demonstrate that it canservice the interest payments on theexisting loan facilities.Further information in relation to the loanfacilities can be found in Note 11 to theFinancial Report.The preparation of Financial Statementsrequires management to make judgements,estimates and assumptions that affect theapplication of accounting policies andreported amounts of assets, liabilities, incomeand expenses. Actual results may differ fromthese estimates. Estimates and underlyingassumptions are reviewed on an ongoingbasis. Revisions to accounting estimates arerecognised in the period in which the estimateis revised and in any future periods affected.Refer to Note 2 for significant areas ofestimation.The accounting policies have been appliedconsistently for the purposes of this FinancialReport.The significant policies which have beenadopted in the preparation of the FinancialReport are:(c) Revenue recognitionRevenue is recognised at the fair value of theconsideration received or receivable net of theamount of goods and services tax (“GST”)levied.Interest incomeInterest income is recognised in the IncomeStatement as it accrues using the effectiveinterest method and if not received at balancedate, is reflected in the Balance Sheet as areceivable.(d) Segment reportingA segment is a distinguishable component ofthe Trust that is engaged either in providingrelated products or services (businesssegment), or in providing products or serviceswithin a particular economic environment(geographical segment), which is subject torisks and rewards that are different from thoseof other segments.(e) Goods and services taxRevenues, expenses and assets arerecognised net of the amount of GST exceptwhere the amount of GST incurred is notrecoverable from the relevant taxationauthority. In these circumstances, the GST isrecognised as part of the cost of acquisition ofthe asset or as part of the expense.Receivables and payables are stated with theamount of GST included. The net amount ofGST recoverable from, or payable to, therelevant taxation authority is included as acurrent asset or liability in the Balance Sheet.Cash flows are included in the Cash FlowStatement on a gross basis. The GSTcomponents of cash flows arising frominvesting and financing activities which arerecoverable from, or payable to, the taxationauthority are classified as operating cashflows.(f) Income taxUnder current Australian income taxlegislation, the Trust is not liable for incometax, provided that the taxable income(including any assessable component ofany capital gains from the sale of investmentassets) is fully distributed to Unitholderseach year.(g) Derivative financialinstrumentsThe Trust holds derivative financial instrumentsto hedge interest rate risk exposures arisingfrom operational, financing and investmentactivities. In accordance with the ResponsibleEntity’s treasury policy, the Trust does not holdor issue derivative financial instruments fortrading purposes.Derivative financial instruments are recognisedinitially at fair value and subsequently areremeasured at each balance date. The gainor loss on re-measurement to fair value isrecognised in the Income Statement. However,where derivatives qualify for hedgeaccounting, recognition of any resultant gainor loss depends on the nature of the itembeing hedged. Refer Note 1(h).(h) HedgingThe Responsible Entity formally designatesand documents the relationship betweenhedging instruments and hedged items at theinception of the transaction, as well as its riskmanagement objective and strategy forundertaking various hedge transactions.The Responsible Entity also documents itsassessment, both at hedge inception and onan ongoing basis, of whether the derivativesused in hedging transactions have been andwill continue to be highly effective in offsettingchanges in fair values or cash flows of hedgeditems.Stockland Direct Office Trust No.1 June 2009 9


Stockland Direct Office Trust No.1Notes to the Financial StatementsFor the Year Ended 30 June 20091 Summary of significantaccounting policies (continued)(h) Hedging (continued)Cash flow hedgeA cash flow hedge is a hedge of the exposureto variability in cash flows attributable to aparticular risk associated with an asset, liabilityor highly probable forecast transaction thatcould affect the Income Statement.The effective portion of changes in the fairvalue of derivatives that are designated andqualify as cash flow hedges is recognised innet assets attributable to Unitholders. The gainor loss relating to the ineffective portion isrecognised immediately in the IncomeStatement.Amounts in net assets attributable toUnitholders are recognised in the IncomeStatement in the periods when the hedgeditem is recognised in the Income Statement.Hedge accounting is discontinued when thehedging instrument expires or is sold,terminated or exercised, or no longer qualifiesfor hedge accounting. At that time, anycumulative gain or loss existing in net assetsattributable to Unitholders remains in netassets attributable to Unitholders and isrecognised when the forecast transaction isultimately recognised in the Income Statement.When a forecast transaction is no longerexpected to occur, the cumulative gain or lossthat was recognised in net assets attributableto Unitholders is recognised immediately in theIncome Statement.(i) Finance costsFinance costs to external partiesFinance costs to external parties includeinterest, amortisation of discounts orpremiums relating to borrowings andamortisation of ancillary costs incurred inconnection with arrangement of borrowings.Where interest rates are hedged, the financecosts are recognised net of any realised effectof the hedge.Finance costs to external parties arerecognised as an expense in the IncomeStatement on an accruals basis, and if notpaid at balance date are reflected in theBalance Sheet as a liability.(j) Cash and cash equivalentsCash and cash equivalents comprise cashbalances and at call deposits. Bank overdraftsthat are repayable on demand and form part ofthe Trust’s cash management are included asa component of cash and cash equivalents forthe purpose of the Cash Flow Statement.(k) Impairment of assetsThe carrying amounts of the Trust’s assets arereviewed at each balance date, to determinewhether there is any indication of impairment.If any such indication exists, the asset’srecoverable amount is estimated.An impairment loss is recognised wheneverthe carrying amount of an asset or its cashgenerating unit exceeds its recoverableamount.Calculation of recoverable amountImpairment of receivables is not recogniseduntil objective evidence is available that a lossevent has occurred. Significant receivables areindividually assessed for impairment.Non-significant receivables are not individuallyassessed. Instead, impairment testing isperformed by placing non-significantreceivables in portfolios of similar risk profiles,based on objective evidence from historicalexperience adjusted for any effects ofconditions existing at each balance date.The recoverable amount of other assets is thegreater of their fair value less costs to sell, andvalue in use. In assessing value in use, theestimated future cash flows are discounted totheir present value using a pre-tax discountrate that reflects the current marketassessment of the time value of money andthe risks specific to the asset. For an assetthat does not generate largely independentcash flows, the recoverable amount isdetermined for the cash-generating unit towhich the asset belongs.Reversals of impairmentAn impairment loss is reversed only to theextent that the asset’s carrying amount doesnot exceed the carrying amount that wouldhave been determined, net of amortisation,if no impairment loss had been recognised.An impairment loss in respect of a held-tomaturitysecurity or receivable carried atamortised cost is reversed if the subsequentincrease in recoverable amount can be relatedobjectively to an event occurring after theimpairment loss was recognised.(l) Trade and other payablesTrade and other payables are stated at cost.Distributions to UnitholdersDistributions payable are recognised in thereporting period in which the distributionsare declared, determined, or publiclyrecommended by the Directors on or beforethe end of the financial year, but not distributedat balance date.(m) Interest-bearing loans andborrowingsInterest-bearing loans and borrowings arerecognised initially at fair value less attributabletransaction costs. Subsequent to initialrecognition, interest-bearing loans andborrowings are stated at amortised cost withany difference between cost and redemptionvalue being recognised in the IncomeStatement over the period of the borrowingson an effective interest basis.(n) ProvisionsA provision is recognised when a present legalor constructive obligation exists as a result of apast event and it is probable that a futuresacrifice of economic benefits will be requiredto settle the obligation, the timing or amount ofwhich is uncertain.If the effect is material, provisions aredetermined by discounting the expected futurecash flows at the rate that reflects currentmarket assessments of the time value ofmoney and, where appropriate, the risksspecific to the liability.Performance feeThe performance fee is recognised in theIncome Statement on an accrual basis. Theperformance fee is calculated in accordancewith the Constitution based on the value of theTrust’s property interest at the current balancedate, discounted to reflect the projected life ofthe Trust and inherent market risks. Theperformance fee recognised will continue tobe remeasured at each reporting date toreflect movements in the Trust’s performanceduring the period. Any revision to theperformance fee will be adjusted through theIncome Statement in the current financial year.(o) Change in net assetsattributable to UnitholdersNon-distributable income, which maycomprise unrealised changes in the net marketvalue of investments or financial instruments,net capital losses, tax-deferred income,accrued income not yet assessable andnon-deductible expenses are recorded as aliability to Unitholders. Any undistributedamounts are recorded as a liability toUnitholders.The Responsible Entity takes into account theeffect of unrealised changes in the net marketvalue of investments or financial instruments,net capital losses, tax-deferred income,accrued income not yet assessable andnon-deductible expenses when assessing theappropriate distribution payout ratio, to ensurethat Unitholders are not disadvantaged. Theseitems are distributed to Unitholders once theamounts have become assessable for taxationpurposes.10Stockland Direct Office Trust No.1 June 2009


Stockland Direct Office Trust No.1Notes to the Financial StatementsFor the Year Ended 30 June 20091 Summary of significantaccounting policies (continued)(p) InvestmentsJoint venture entitiesThe Trust’s 50% investment in SDOTSub-Trust 1 is treated as an investment in ajoint venture entity.Investments in joint venture entities areaccounted for using equity accountingprinciples. Investments in joint venture entitiesare carried at the lower of the equity accountedamount and the recoverable amount.The Trust’s share of the joint venture entity’snet profit or loss is recognised in the Trust’sIncome Statement from the date joint controlcommences until the date joint control ceases.Other movements in reserves are recogniseddirectly in reserves, classified as a liability toUnitholders.(q) New accounting standardsCertain new or amended accountingstandards have been published that are notmandatory for this reporting year. The impactof these new or amended standards (to theextent relevant to the Trust) and interpretationsare set out below.Revised AASB 101 “Presentation of FinancialStatements” (“AASB 101”) introduces as afinancial statement (formerly “primary”statement) the “Statement of ComprehensiveIncome”. The revised standard does notchange the recognition, measurement ordisclosure of transactions and events that arerequired by other AASBs. The revised AASB101 will become mandatory for the Trust’s30 June 2010 Financial Report.AASB 2008-2 “Amendments to AustralianAccounting Standards – Puttable FinancialInstruments and Obligations arising onLiquidation” (“AASB 2008-02”) changes thedefinition of a financial liability requiringputtable instruments that meet certainconditions to be classified as equity. Theamendments, which become mandatory forthe Trust’s 30 June 2010 Financial Report,are not expected to have any impact on theFinancial Statements.AASB 2008-5 and AASB 2008-6“Amendments to Australian AccountingStandards arising from the AnnualImprovement Projects: The improvementproject” is an annual project that provides amechanism for making non urgent, butnecessary, amendments to IFRSs. Thesestandards will become mandatory for theTrust’s 30 June 2010 Financial Report.These recently issued or amended standardsare not expected to have a significant impacton the amounts recognised or disclosuresmade in these Financial Statements whenrestated for the application of these new oramended accounting standards.2 Accounting estimates andassumptionsEstimates and judgements are continuallyevaluated and are based on historicalexperience as adjusted for current marketconditions and other factors, includingexpectations of future events that are believedto be reasonable under the circumstances.The Trust makes estimates and assumptionsconcerning the future. The resultingaccounting estimates will, by definition, seldomequal the related actual results. The estimatesand assumptions that have a significant risk ofcausing a material adjustment to the carryingamount of assets and liabilities within the nextfinancial year are discussed below.(a) Key sources of estimationuncertaintyEstimates of fair value of investmentproperty interestThe Trust’s joint venture entity holds aninvestment property which is measured at fairvalue.The best evidence of fair value is currentprices in an active market for similarinvestment properties. Where such informationis not available, the Responsible Entitydetermines the property’s value within a rangeof reasonable fair value estimates. In makingits judgement, the Responsible Entityconsiders information from a variety of sourcesincluding:(i) current prices in an active market forproperties of different nature, condition orlocation (or subject to different leases orother contracts), adjusted to reflect thosedifferences;(ii) recent prices of similar properties in lessactive markets, with adjustments to reflectany changes in economic conditions sincethe date of the transactions that occurredat those prices;(iii) discounted cash flow projections basedon reliable estimates of future cash flows,derived from the term of any existing leaseand other contracts, and (where possible)from external evidence such as currentmarket rents for similar properties in thesame location and condition, and usingdiscount rates that reflect current marketassessments of the uncertainty in theamount and timing of cash flows; and(iv) capitalised income projections based upona property’s estimated net market income,which is assumed to be a level annuity inperpetuity, and a capitalisation rate derivedfrom analysis of market evidence.Reversions associated with short-termleasing risks/costs, incentives and capitalexpenditure may be deducted from thecapitalised net income figure.Assumptions underlying the ResponsibleEntity’s estimates of fair value of investmentproperty interestThe discounted cash flow approach appliedfor investment properties usually includesassumptions in relation to current and recentinvestment property prices. If such prices arenot available, then the fair value of investmentproperties is determined using assumptionsthat are mainly based on market conditionsexisting at each balance date.The principal assumptions underlying theResponsible Entity’s estimation of fair value arethose related to the receipt of contractualrentals, expected future market rentals, voidperiods, maintenance requirements, andappropriate discount rates. These valuationsare regularly compared to actual market yielddata, and actual transactions by the Trust andthose reported by the market.The expected future market rentals aredetermined on the basis of current marketrentals for similar properties in the samelocation and condition.Estimates of performance fee expenseA performance fee is payable to theResponsible Entity if certain out performanceis achieved by the Trust. The fee is calculatedon a sliding scale and is payable by the Trustprovided the net sales proceeds of the Trust’sproperty interest exceed the application priceby 10%. Refer Note 20 for further details.The Responsible Entity determines the value ofthe performance fee to be provided based onthe current property valuation and estimatesregarding the likely sales proceeds on disposalof the Trust’s property interest.The best evidence of the likely sales proceedsis the fair value of the property interest. SeeNote 2(a)(i)–(iv) above.An estimate of the performance fee expense isthen made factoring in the current fair value ofthe Trust’s property interest and expectationsregarding future property market volatility.Stockland Direct Office Trust No.1 June 2009 11


Stockland Direct Office Trust No.1Notes to the Financial StatementsFor the Year Ended 30 June 20092009 2008$ $4 Auditors’ remunerationAudit services to KPMG (Australia)Audit and review of the Financial Reports 27,000 20,000Other audit services – 3,000Compliance audit services 15,000 15,00042,000 38,000Other services to KPMG (Australia)Taxation compliance services 8,750 8,9008,750 8,900Total remuneration 50,750 46,9002009 2008$’000 $’0005 Current assets – Cash and cash equivalentsCash at bank and on hand 2,342 2,157The weighted average interest rate for cash at bank and on hand as at 30 June 2009 was 4.24% p.a. (2008: 6.85% p.a.).6 Current assets – Other assetsGoods and services tax (“GST”) receivable 134 45Prepayments 4 4Interest receivable under the interest rate swap – 127138 176Stockland Direct Office Trust No.1 June 2009 13


Stockland Direct Office Trust No.1Notes to the Financial StatementsFor the Year Ended 30 June 20097 Non-current assets – Investments accounted for using the equity methodLocationPrincipal activityHoldingCarrying amount2009 2008 2009 2008% % $’000 $’000SDOT Sub-Trust 1 NSW Property investment 50 50 233,825 283,732The joint venture was formed in Australia.The principal activity is investment in real property.During the financial year, an independent valuation was performed as at 30 June 2009, resulting in the Waterfront Place property being revalued downwards from $570,000,000 to$471,500,000 (100% basis). The capitalisation rate used in the June 2009 valuation was 7.25% (2008: 6.50%). The weighted average lease expiry is 4.81 years (2008: 5.57 years).2009 2008$’000 $’000Movements in carrying amount of investments accounted for using the equity methodCarrying amount at the beginning of the financial year 283,732 239,618Interest in joint venture entity acquired during the financial year 569 6,485Share of net (loss)/profit (35,495) 52,875Distributions received (14,981) (15,246)Carrying amount at the end of the financial year 233,825 283,732Share of joint venture entity’s assets and liabilitiesCurrent assets 1,949 2,286Non-current assets 235,023 284,284Total assets 236,972 286,570Current-liabilities (3,147) (2,838)Total liabilities (3,147) (2,838)Share of net assets after equity accounting adjustments 233,825 283,732Share of joint venture entity’s revenue, expenses and resultsRevenue 20,762 18,486(Loss)/gain from fair value adjustment of investment property (50,840) 38,983Expenses (5,417) (4,594)Net (loss)/profit accounted for using the equity method (35,495) 52,875Summarised financial information of the investment using the equity method (100%)Current assets 3,899 4,572Non-current assets 470,046 568,568Current liabilities (6,294) (5,676)Net assets 467,651 567,464Revenues 41,524 36,971(Loss)/gain from fair value adjustment of investment property (101,680) 77,967Expenses (10,833) (9,188)Net (loss)/profit (70,989) 105,75014Stockland Direct Office Trust No.1 June 2009


Stockland Direct Office Trust No.1Notes to the Financial StatementsFor the Year Ended 30 June 20092009 2008$’000 $’0008 Non-current assets – Other assetsFair value of hedging instrument – 3,2579 Current liabilities – Trade and other payablesTrade payables and accruals 412 1,059Interest payable on loan facility 305 654Distribution payable 1,455 1,6182,172 3,33110 Current liabilities – Other liabilitiesInterest payable under interest rate swap 214 –11 Non-current liabilities – Interest-bearing loans and borrowingsLoan facility (including capital expenditure) 100,235 99,735Less: attributable transaction costs (125) (232)Total Balance Sheet carrying amount at amortised cost 100,110 99,503Details of the facilities are set out below:FacilityMaturity dateFacility limitUtilised2009 2008 2009 2008$’000 $’000 $’000 $’000Loan facility 1 July 2010 92,538 92,538 92,538 92,538Capital expenditure 1 July 2010 15,896 15,896 7,697 7,197108,434 108,434 100,235 99,735Loan facilityThe Trust has a $92,538,000 (2008: $92,538,000) loan facility agreement with Westpac Banking Corporation (“Westpac”). As at 30 June 2009, $92,538,000 had been drawn down(2008: $92,538,000). The loan facility has been effectively hedged through an interest rate swap contract. Taking into account the interest rate swap in place, the weighted average interestrate on the loan facility for the year ended 30 June 2009 is 6.47% p.a. (2008: 6.47% p.a.).Westpac Administration Pty Limited has a fixed and floating charge over the units in the joint venture entity SDOT Sub-Trust 1.Capital expenditureThe capital expenditure facility limit is $15,896,000 (2008: $15,896,000).Interest is charged on the utilised portion of the facility at 90 day BBSY plus a margin of 0.50% p.a. As at 30 June 2009, $7,697,000 (2008: $7,197,000) had been drawn down.Taking into account the interest rate swap in place, the weighted average interest rate on the total loan facilities for the year ended 30 June 2009 was 6.58% p.a. (2008: 6.72% p.a.).A line fee of 0.10% p.a. is charged on the overall facility limit.The facilities were originally due to expire on 30 June 2010. During the year, the loan facilities were extended to 1 July 2010 to align to the maturity of the interest rate swap currently in place.Given the impending expiry of the facilities, the Responsible Entity continues to be in ongoing, positive discussions with Westpac regarding the renewal or refinancing of the facilities, withthe outcome of the extension of the life of the Trust being a significant consideration with regards to the terms of the renewed facility.Stockland Direct Office Trust No.1 June 2009 15


Stockland Direct Office Trust No.1Notes to the Financial StatementsFor the Year Ended 30 June 200911 Non-current liabilities – Interest-bearing loans and borrowings (continued)Interest rate swap contractThe Responsible Entity, on behalf of the Trust, has entered into an interest rate swap contract to manage cash flow risks associated with the rates on borrowings that are floating. The interestrate swap allows the Trust to swap the floating rate borrowing into a fixed rate. The Trust does not hold derivative financial instruments for speculative purposes.The face value of the swap contract of $92,538,000 (2008: $92,538,000) is designated as an effective hedge of a portion of the loan facility fixing the cost of borrowing of the Trust for the termof the loan facility. The swap covers 100% (2008: 100%) of the loan facility outstanding and is now timed to expire as the loan repayment falls due. Given the impending expiry of the interest rateswap contract, the Responsible Entity continues to be in ongoing, positive discussions with Westpac regarding renewal or refinancing the swap, with the outcome of the extension of the lifeof the Trust being a significant consideration with regards to the terms of the renewed swap.The fixed rate is 5.97% p.a. (2008: 5.97% p.a.) and the variable rate is the 90 day Bank bill rate which as at 30 June 2009 was 3.21% p.a. (2008: 7.70% p.a.).2009 2008$’000 $’00012 Non-current liabilities – ProvisionsPerformance fee provision at the beginning of the financial year 6,797 5,232Performance fee provision (written back)/made during the financial year (1,009) 1,193Unwind of discount 450 372Performance fee provision at the end of the financial year 6,238 6,797The Responsible Entity is entitled to a performance fee. The fee is calculated on a sliding scale and is payable by the Trust provided the net sales proceeds of theTrust’s property interest exceed the application price by 10%.A performance fee provision has been recognised as there has been, until recently, a history of strong upward revaluations of the Waterfront Place property, whichindicates it is likely an amount will be payable by the Trust.Based upon the value of the property interest as at 30 June 2009 the estimated net sales proceeds exceed the application price by greater than 40%. Using the slidingscale, a performance fee of 2.8% of the net sales proceeds will be payable in the future. Applying appropriate discount rates to reflect the projected life of the Trustand the inherent risks associated with market value movements in the property, a provision of $6,238,000 (2008: $6,797,000) has been recognised.13 Non-current liabilities – Other liabilitiesFair value of hedging instrument 2,302 –16Stockland Direct Office Trust No.1 June 2009


Stockland Direct Office Trust No.1Notes to the Financial StatementsFor the Year Ended 30 June 200914 Units on issue classified as a liability2009No. of units2008No. of unitsUnits on issue 66,500,000 66,500,000 60,145 60,1452009$’0002008$’000Date Details No. of units Issue price $’000Movements in units1 July 2007 Opening balance 66,500,000 – 60,14530 June 2008 Balance 66,500,000 – 60,14530 June 2009 Closing balance 66,500,000 – 60,145Rights and restrictions over unitsEach unit ranks equally with all other units for the purpose of distribution and on termination of the Trust.2009 2008Notes $’000 $’00015 ReservesClassified as a liabilityBalance at the beginning of the financial year 1 119,546 80,926Change in net assets attributable to Unitholders (48,863) 37,618Effective portion of changes in fair value of the cash flow hedge during the financial year 8, 13 (5,559) 1,002Balance at the end of the financial year 65,124 119,5461In order to comply with AASB 132, the Unitholders’ funds are required to be treated as a liability and trust distributions to be treated as an expense in the Income Statement.16 Net assets attributable to Unitholders classified as a liabilityDate Details $’0001 July 2008 Opening balance 141,07130 June 2008 Movement in fair value of cash flow hedge 1,00230 June 2008 Change in net assets for the financial year attributable to Unitholders 37,6181 July 2008 Balance 179,69130 June 2009 Movement in fair value of cash flow hedge (5,559)30 June 2009 Change in net assets for the financial year attributable to Unitholders (48,863)30 June 2009 Closing balance 125,269The above net assets attributable to Unitholders is made up as follows:2009 2008Notes $’000 $’000Units on issue classified as a liability 14 60,145 60,145Reserves classified as a liability 15 65,124 119,546125,269 179,691Stockland Direct Office Trust No.1 June 2009 17


Stockland Direct Office Trust No.1Notes to the Financial StatementsFor the Year Ended 30 June 200917 Distributions to UnitholdersDistributions to Unitholders recognised by the Trust are:Distributionper unitTotal amount$’000 Date of payment Tax deferred200930 September 2008 2.1875¢ 1,455 31 October 2008 100%31 December 2008 2.1875¢ 1,455 27 February 2009 100%31 March 2009 2.1875¢ 1,455 28 April 2009 100%30 June 2009 2.1875¢ 1,455 28 August 2009 1 100%Total distributions 5,820200830 September 2007 2.0225¢ 1,345 31 October 2007 100%31 December 2007 2.0225¢ 1,345 29 February 2008 100%31 March 2008 2.0225¢ 1,345 27 April 2008 100%30 June 2008 2.4325¢ 1,618 29 August 2008 100%Total distributions 5,6531Proposed payment date.2009 2008$’000 $’00018 Notes to the Cash Flow StatementReconciliation of (loss)/profit from operating activities to net cash inflow from operating activities(Loss)/profit from operating activities (43,043) 43,271Amortisation of borrowing costs 107 56Change in value of investment using the equity method 50,476 (37,629)Net cash inflow from operating activities before change in assets and liabilities 7,540 5,698Decrease/(increase) in trade and other receivables 38 (160)(Decrease)/increase in payables and provisions (1,341) 1,862Net cash inflow from operating activities 6,237 7,40019 Financial instruments(a) Financial risk and capital managementThe Trust’s activities expose it to a variety of financial risks: credit risk, liquidity risk and interest rate risk. The Trust’s overall financial risk management focuses on the unpredictability of financialmarkets and seeks to minimise potential adverse effects on the Trust’s financial performance. The Trust uses derivative financial instruments to hedge exposure to fluctuations in interest rates.Financial risk and capital management is carried out by a central treasury department under policies approved by the Board of the Responsible Entity. The Board provides written principles ofoverall risk management, as well as written policies covering specific areas such as managing capital, mitigating interest rate and credit risks, use of derivative financial instruments and investingexcess liquidity.18Stockland Direct Office Trust No.1 June 2009


Stockland Direct Office Trust No.1Notes to the Financial StatementsFor the Year Ended 30 June 200919 Financial instruments (continued)(a) Financial risk and capital management (continued)Capital managementThe Responsible Entity’s objective when managing capital is to safeguard the ability to continue as a going concern, whilst providing returns for Unitholders and benefits for other stakeholdersand to maintain a capital structure to minimise the cost of capital.The Responsible Entity can alter the capital structure of the Trust by adjusting the amount of distributions paid to Unitholders.In this context, the Trust considers capital to include interest-bearing loans and borrowings and net assets attributable to Unitholders.Management monitor the capital structure of the Trust through the loan-to-value ratio. The ratio is calculated as the amount of the loan facility drawn divided by 50% of the latest valuation of theWaterfront Place property. The loan-to-value ratio as at 30 June 2009 is 43% (2008: 35%).Credit riskCredit risk is the risk that a customer or counterparty to a financial instrument will default on their contractual obligations resulting in a financial loss to the Trust.Derivative counterparties and cash deposits are currently limited to high credit quality financial institutions.As at 30 June 2009 and 30 June 2008, there were no significant financial assets that were past due. Additionally, there were no significant financial assets that would otherwise be past duewhose terms have been renegotiated.The carrying amount of financial assets included in the Balance Sheet represents the Trust’s maximum exposure to credit risk in relation to these assets. Refer to Note 5, 6 and 8 for a breakdownof these financial assets.Liquidity riskLiquidity risk is the risk that the Trust will not be able to meet its financial obligations as they fall due. Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents,the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Trust aims at maintaining flexibility in funding by keepingsufficient committed credit lines available. Management prepares and monitors rolling forecasts of liquidity requirements on the basis of expected cash flow.The Trust manages liquidity risk through monitoring the maturity of its debt portfolio. The current weighted average debt maturity is 1.0 year (2008: 2.0 years). The Responsible Entity continuesto be in ongoing, positive discussions with Westpac regarding the renewal or refinancing of the facilities, with the outcome of the extension of the life of the Trust being a significant considerationwith regards to the tenure of the renewed facility.The table on the next page reflects all contractual maturities of financial liabilities including principal and estimated interest cash flows calculated based on conditions existing at balance date. Theamounts presented represent the future undiscounted cash flows and do not equate to carrying amounts of financial liabilities in the Balance Sheet.Stockland Direct Office Trust No.1 June 2009 19


Stockland Direct Office Trust No.1Notes to the Financial StatementsFor the Year Ended 30 June 200919 Financial instruments (continued)(a) Financial risk and capital management (continued)Liquidity risk (continued)Contractual maturity of financial liabilities including derivatives and estimated interestContractualcash flows$’0001 year or less$’0001-2 years$’0002-3 years$’000End of Trust life 1$’00030 June 2009Trade and other payables (412) (412) – – –Distribution payable (1,455) (1,455) – – –Loan facility (104,702) (4,081) (100,621) 2 – –Interest rate swap (2,566) (2,414) (152) – –Net assets attributable to Unitholders classified as a liability 1 (125,269) – – – (125,269)(234,404) (8,362) (100,773) – (125,269)30 June 2008Trade and other payables (1,059) (1,059) – – –Distribution payable (1,618) (1,618) – – –Loan facility (117,513) (8,816) (108,697) – –Interest rate swap 3,586 1,969 2,881 (1,264) 2 –Net assets attributable to Unitholders classified as a liability 1 (179,691) – – – (179,691)(296,295) (9,524) (105,816) (1,264) (179,691)1Under the provisions of the Trust Constitution, the net assets attributable to Unitholders are repayable on the termination of the Trust which can occur at a date which the Unitholders determine by extraordinary resolution (as defined by the Corporations Act).This is scheduled to be decided by Unitholders on or before 31 December 2009 at a meeting convened by the Responsible Entity. The amount may not be called in the near future and therefore it is categorised as “End of Trust life” rather than at a stated maturity.2At 30 June 2008, the loan facility’s maturity date was 30 June 2010 and the interest rate swap’s maturity date was on 1 July 2010. However, during the current financial year, the loan facility’s maturity date was extended to 1 July 2010 to align it with the maturityof the swap.Interest rate riskInterest rate risk is the risk that the fair value of financial instruments or cash flows associated with instruments will fluctuate due to changes in market interest rates.The income and the associated operating cash flows of the Trust’s financial assets are substantially independent of changes in market interest rates.The Responsible Entity, on behalf of the Trust, manages interest rate risk by using floating-to-fixed interest rate swaps. The interest rate swap has the economic effect of converting borrowingsfrom floating rates to fixed rates. The debt fixed/hedged percentage as at 30 June 2009 was 92% (2008: 93%). Under the interest rate swaps, the Responsible Entity agrees with other parties toexchange, at specified intervals, generally quarterly, the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional principal amounts.Refer to Note 19(b) for further details about the interest rate swap contracts.Sensitivity analysisThe following sensitivity analysis shows the effect on the Trust’s Income Statement and net assets attributable to Unitholders if market interest rates at balance date had been 25 basis pointshigher/lower (2008: 25 basis points) with all other variables held constant.An increase of 25 basis points (2008: 25 basis points) in market interest rate would result in a loss to the Income Statement of $19,243 (2008: loss of $18,000) and an increase in net assetsattributable to Unitholders of $192,316 (2008: $376,000). A decrease of 25 basis points (2008: 25 basis points) in market interest rate would result in a gain to the Income Statement of $19,243(2008: gain of $18,000) and a decrease in net assets attributable to Unitholders of $192,876 (2008: $378,000).20Stockland Direct Office Trust No.1 June 2009


Stockland Direct Office Trust No.1Notes to the Financial StatementsFor the Year Ended 30 June 200919 Financial instruments (continued)(b) Derivative financial instruments used by the TrustThe Trust is party to derivative financial instruments in the normal course of business in order to hedge exposure to fluctuations in interest rates in accordance with the Trust’s financial riskmanagement policies as mentioned above.Interest rate swap contractThe Responsible Entity, on behalf of the Trust, has entered into an interest rate swap contract to manage cash flow risks associated with the interest rates on borrowings that are floating.The interest rate swap allows the Trust to swap the floating rate borrowing into a fixed rate. The Trust does not hold derivative financial instruments for speculative purposes.The face value of the swap contract of $92,538,000 is designated as an effective hedge of the loan facility fixing the cost of borrowing of the Trust for the term of the loan facility.The fixed interest rate is 5.97% p.a. (2008: 5.97% p.a.) and the variable rate is the 90 day Bank bill rate which as at 30 June 2009 was 3.21% p.a. (2008: 7.70% p.a.).As at 30 June 2009, the notional principal amounts and periods of expiry of the interest rate swap contract for the loan facility are as follows:2009 2008$’000 $’000Less than 1 year – –1-2 years 92,538 –2-3 years – 92,538The contract requires settlement of net interest receivable or payable quarterly. The settlement dates coincide with the dates on which interest is payable on the underlying debt.This swap has been designated as an effective cash flow hedge in accordance with AASB 139 “Financial Instruments: Recognition and Measurement” (“AASB 139”) and has been tested foreffectiveness. As at 30 June 2009, the swap is considered to be effective and accordingly the full change in the fair value is recognised in net assets attributable to Unitholders. Refer accountingpolicy at Note 1(h).At balance date, the swap contract had a fair value of $2,302,000 (2008: asset of $3,257,000) included in Non-current liabilities – Other liabilities on the Balance Sheet (2008: Non-currentassets – Other assets).(c) Fair values of financial assets and financial liabilitiesThe carrying amounts of cash and cash equivalents, other receivables, trade and other payables, interest-bearing loans and borrowings and the interest rate swap as disclosed in theBalance Sheet reflect the fair value of these financial assets and liabilities as at 30 June 2009.The fair value of the interest rate swap has been determined in accordance with generally accepted pricing models by discounting the expected future cash flows at prevailing marketinterest rates.The interest rate swap has been accounted for on the Balance Sheet at its fair value. The interest rate swap has been deemed to be an effective hedge. Accordingly, the unrealised gainhas been recognised directly in net assets attributable to Unitholders.Stockland Direct Office Trust No.1 June 2009 21


Stockland Direct Office Trust No.1Notes to the Financial StatementsFor the Year Ended 30 June 200920 Related partiesStockland Capital Partners Limited (“SCPL”) is the Responsible Entity of the Trust. The Key Management Personnel of the Trust has been defined as the Responsible Entity.The Responsible Entity does not hold any units in the Trust.The Directors of the Responsible Entity and their units held in the Trust as at 30 June 2009 are as follows:DirectorsNumber of unitsMr David Kent 20,000Mr Matthew Quinn 15,000Responsible Entity fees and other transactions2009 2008$’000 $’000Responsible Entity feesThe Responsible Entity charged responsible entity fees calculated at 0.45% p.a. of the gross value of the assets of the Trust. 1,248 1,231For the year ended 30 June 2009, the Trust has not deferred payment of the Responsible Entity Fee (2008: $Nil).Total accrued and deferred Responsible Entity fees included in Current liabilities – Trade and other payables as at 30 June 2009 is $289,695 (2008: $977,222).Performance feesThe Responsible Entity is entitled to a performance fee which is calculated on a sliding scale and is payable by the Trust provided the net sales proceeds(559) 6,797of the Trust’s property interest exceeds the application price by at least 10%. Refer Note 12.Total accrued Performance fee included in Non-current liabilities – Provisions as at 30 June 2009 is $6,238,000 (2008: $6,797,000).Total Responsible Entity fees and other transactions recognised in the Income Statement 689 8,028Other related party transactionsLimited Liquidity Facility (“LLF”)Westpac has agreed to acquire up to 521,000 units in the Trust per quarter at a 2.5% discount to Net Tangible Asset (“NTA”) per unit less transaction costs, from Unitholders seeking totransfer their units. Stockland Trust Management Limited (“STML”), as Responsible Entity for Stockland Trust, has placed a standing order with Westpac to acquire a maximum of 521,000units per quarter at a price calculated in accordance with a predetermined formula. The LLF can be terminated by Westpac should STML withdraw its standing order with Westpac toacquire units on Stockland Trust’s behalf, which it may do at any time at its discretion. As per the Product Disclosure Statement, the LLF will terminate on 30 September 2009.During the financial year, STML, as Responsible Entity of Stockland Trust, acquired 2,084,000 units (2008: 1,552,500) in the Trust via the LLF.Units held by Stockland TrustAs at 30 June 2009, Stockland Trust Management Limited, as Responsible Entity for Stockland Trust, a related party of the Responsible Entity, holds 4,621,500 units (2008: 2,537,500) in the Trust.22Stockland Direct Office Trust No.1 June 2009


Stockland Direct Office Trust No.1Notes to the Financial StatementsFor the Year Ended 30 June 200920 Related parties (continued)Other related party transactions (continued)Property Management and Leasing FeeStockland Property Management Limited, a related party of the Responsible Entity, charged $1,073,257 (2008: $1,336,589) to SDOT Sub-Trust 1 for property management services includingonsite property management staff and leasing fees. Of this amount, $841,205 (2008: $821,816) forms part of the outgoings recoverable from tenants pursuant to leases.RentSDOT Sub-Trust 1 charged rent of $90,050 (2008: $86,349) to Stockland Property Management Limited, a related party of the Responsible Entity, for the occupancy of the managementoffice at the property.Limited debt guarantee feeStockland Corporation Limited, a related party of the Responsible Entity, charged $100,146 (2008: $97,798) to the Trust for the provision of a limited and partial guarantee for the benefitof the Trust to Westpac as the provider of the debt facility. The fee is calculated at 0.1% of the drawn balance of the debt facility.Total accrued limited debt guarantee fee included in Current liabilities – Trade and other payable as at 30 June 2009 is $25,037 (2008: $8,266).21 CommitmentsAs at 30 June 2009, the Trust has no commitments (2008: $Nil).22 Other informationLife of the TrustThe Trust terminates on the earliest of:(a) the 80th anniversary of the date before the Trust commenced;(b) a date which has been proposed to Unitholders by the Responsible Entity, and which the Unitholders have approved by Special Resolution; and(c) the date on which the Trust terminates in accordance with the provisions of the Trust Constitution or by law.23 Contingent liabilities and contingent assetsAs at 30 June 2009, the Trust has no contingent liabilities and no contingent assets (2008: $Nil).24 Events subsequent to the end of the yearThere have been no events subsequent to the end of the year which would have a material effect on the Trust’s Financial Statements as at 30 June 2009.Stockland Direct Office Trust No.1 June 2009 23


Stockland Direct Office Trust No.1Directors’ DeclarationFor the Year Ended 30 June 2009In the opinion of the Directors of Stockland Capital Partners Limited, the Responsible Entity of Stockland Direct Office Trust No. 1:1. the Financial Statements and Notes set out on pages 5 to 23, are in accordance with the Corporations Act 2001 including:(a) giving a true and fair view of the financial position of the Trust as at 30 June 2009 and of its performance for the financial year ended on that date; and(b) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.2. the Financial Report also complies with International Financial Reporting Standards as disclosed in Note 1(a);3. at the date of this declaration there are reasonable grounds to believe that the Trust will be able to pay its debts as and when they become due and payable;4. the Trust has operated during the financial year ended 30 June 2009 in accordance with the provisions of the Trust Constitution as amended dated 19 August 2004; and5. the Register of Unitholders has, during the financial year ended 30 June 2009, been properly drawn up and maintained so as to give a true account of the Unitholders of the Trust.Signed in accordance with a resolution of the Directors of the Responsible Entity made pursuant to Section 295(5) of the Corporations Act 2001.Signed in accordance with a resolution of the Directors:Matthew QuinnDirectorDated at Sydney, 20 August 200924Stockland Direct Office Trust No.1 June 2009


Stockland Direct Office Trust No.1Independent Auditor’s Reportto the Untiholders of Stockland Direct Office Trust No.1Stockland Direct Office Trust No.1 June 2009 25


Stockland Direct Office Trust No.1Independent Auditor’s Reportto the Untiholders of Stockland Direct Office Trust No.1KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative.26Stockland Direct Office Trust No.1 June 2009


Stockland Corporation LtdACN 000 181 733Head OfficeLevel 25, 133 Castlereagh StreetSydney NSW 2000SydneyTelephone 02 9035 2000MelbourneTelephone 03 9095 5000BrisbaneTelephone 07 3305 8600PerthTelephone 08 9368 9222United Kingdom37 Maddox StreetLondonW1S 2PPTelephone +44 (0) 845 070 4633www.stockland.com.auDisclaimer of LiabilityWhile every effort is made to provide accurate and complete information, Stockland does not warrant or represent that the information in this brochure is free from errors or omissionsor is suitable for your intended use. Subject to any terms implied by law and which cannot be excluded, Stockland accepts no responsibility for any loss, damage, cost or expense(whether direct or indirect) incurred by you as a result of any error, omission or misrepresentation in information. Note: All figures are in Australian dollars unless otherwise indicated.

Hooray! Your file is uploaded and ready to be published.

Saved successfully !

Ooh no, something went wrong !